Luxembourg FATCA Intergovernmental Agreement Signed

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The Intergovernmental Agreement between the US and Luxembourg to Improve International Tax Compliance and to Implement FATCA (IGA) was signed on 28 March.

The IGA is based on the Model 1 IGA previously issued by the US Treasury and provides that Reporting Luxembourg Financial Institutions will report information annually on certain account holders to the Luxembourg tax authorities, which in turn will provide such information to the United States under an automatic exchange of information.

All Luxembourg Financial Institutions (FIs) (Custodial Institutions, Depository Institutions, Investment Entities and Specified Insurance Companies) will have to ascertain whether they are Reporting or Non-Reporting Luxembourg FIs in order to certify their status to other Financial Institutions with which they hold an account. They will all be required to apply new due diligence procedures to new accounts from 1 July 2014 and to pre-existing accounts by 30 June 2015 or 2016. Reporting Luxembourg Financial Institutions will be required to register with the IRS and obtain a Global Intermediary Identification Number (GIIN), although in all other respects they will interact with the Luxembourg tax authorities.

A detailed alert on the content and implications of the IGA will be issued shortly.

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